In applicants' copending application Ser. No. 21071 filed Mar. 16, 1979, and assigned to the same assignee as the present application, a method and apparatus for encoding a video signal is described wherein the intensity value of each picture element (pel) is predicted by using an estimate of the displacement of objects in the picture to locate the picture element or location in the previous frame which has the same intensity value. Three types of picture segments are identified by first dividing the picture into background and moving areas and then classifying pels in the moving area as compensable or uncompensable, depending upon the magnitude of the prediction error. The video signal is then encoded using (a) address information for both moving area compensable and uncompensable segments, (b) address information for the non-moving or background segment, and (c) the error values for the uncompensable pels.
While the coding strategy of the aforesaid technique is successful in significantly reducing the bit rates needed to represent the video signal as compared to conditional replenishment which does not employ motion compensation, it has been found that use of a single predictor in all areas of a picture is not always advantageous. Furthermore, encoding of addresses for the three types of picture segments is often inefficient. Accordingly, it is the broad object of the present invention to further reduce the amount of data which must be encoded to adequately represent and efficiently encode a video signal.